Cryptocurrency Arbitrage

f22raptor

f22raptor

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I just learned of crypto arbitrage because of this article
tinyurl.com

Future Forex is betting on crypto asset arbitrage gaining traction in South Africa

SA firm uses arbitrage to buy and sell Bitcoin while taking on some risks for clients.…
tinyurl.com tinyurl.com

The time is 1457hrs. On Luno bitcoin is R739 707. Which is $51 583 according to fin24's rate of R14.34 to 1USD

On gemini.com, https://www.gemini.com/prices an American crypto trading platform, bitcoin is $49 939

Is there a demo software I can use to try this out before I dive all in?
 
Factor in the withdrawal fees, transfer time, transaction fees and see if it's still worth your while. You need a lot of capital to make this worthwhile.
 
As mentioned by @saor, it's not as simple as it looks.

The few times I tried to do this, even with cryptos that have faster transfer times (XRP, for example), I'd make a few 100 rands for a sizeable (R40k+) input.

No idea about demo software unfortunately.
 
Will this not be a CGT event according to SARS?
 
f22raptor said:
I just learned of crypto arbitrage because of this article
tinyurl.com

Future Forex is betting on crypto asset arbitrage gaining traction in South Africa

SA firm uses arbitrage to buy and sell Bitcoin while taking on some risks for clients.…
tinyurl.com tinyurl.com

The time is 1457hrs. On Luno bitcoin is R739 707. Which is $51 583 according to fin24's rate of R14.34 to 1USD

On gemini.com, https://www.gemini.com/prices an American crypto trading platform, bitcoin is $49 939

Is there a demo software I can use to try this out before I dive all in?
Click to expand...

Its a lot better to use a company (Ovex, Valr) they have trading bots / software that will outperform any person doing this part and even full time.
 
Superman-7 said:
As mentioned by @saor, it's not as simple as it looks.

The few times I tried to do this, even with cryptos that have faster transfer times (XRP, for example), I'd make a few 100 rands for a sizeable (R40k+) input.

No idea about demo software unfortunately.
Click to expand...

Is R300 a day now worth it? 300 multiplied by 30 = 9000
 
f22raptor said:
How would they know? I will be using funds in the PayPal account earned doing online work.
Click to expand...

www.sars.gov.za

Crypto Assets & Tax | South African Revenue Service

20 March 2026 – Budget 2026 Frequently Asked QuestionsKey Crypto Assets & Tax changes from Budget 2026: FAQs on the Crypto Assets & Tax changes
www.sars.gov.za www.sars.gov.za

How is SARS tracing crypto asset transactions?​

Legislatively, SARS is granted a wide range of collection powers in terms of the Income Tax Act, including a requirement for third-party service providers to submit financial data. Enforcement and audit processes are confidential and not shared with members of the public.
Click to expand...
1630588323978.png

Do I need to pay tax on crypto assets?​

Yes, normal income tax rules apply to crypto assets and affected taxpayers need to declare crypto assets’ gains or losses as part of their taxable income.

The onus is on taxpayers to declare all crypto assets-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.
Click to expand...
 
Speedster said:
Will be very hard to argue CGT on a hyper-short duration trade
Click to expand...

If you bought $100 000 worth of bitcoin at $25 000 whenever, and you are now selling your total of $202 000 for your arbitrage trade at $51 000, then you have created a CGT event.
You made a profit of $102 000 on that trade.

Or am I understanding CGT wrong?
 
Pegasus said:
If you bought $100 000 worth of bitcoin at $25 000 whenever, and you are now selling your total of $202 000 for your arbitrage trade at $51 000, then you have created a CGT event.
You made a profit of $102 000 on that trade.

Or am I understanding CGT wrong?
Click to expand...
You're understanding both arbitrage and CGT wrong. What you've described is stock standard income (or profit). Capital gains requires a long term investment intention (typically at least 3 years).
 
Speedster said:
You're understanding both arbitrage and CGT wrong. What you've described is stock standard income (or profit). Capital gains requires a long term investment intention (typically at least 3 years).
Click to expand...
I get the arbitrage part.

There are two trades in the arbitrage event.
The first one attracts income tax snd not CGT then?

So it falls under Gross Income?

1630589153212.png
 
Pegasus said:
I get the arbitrage part.

There are two trades in the arbitrage event.
The first one attracts income tax snd not CGT then?
Click to expand...
Arbitrage is a virtually instantaneous transaction - CGT requires holding the asset for a number of years.

EDIT: Gross income yes. Taxed fully at your marginal rate.
 
Unfortunately, they don't tell you about how SARS are taking forever to approve FIA applications after making a change in July (if you want you use the FIA allowance that is).
 
In general I would caution against any type of arbitrage trade. Anything worthwhile is going to be captured by the big players, who can do it faster and more safely than you.

Something that looks immediately profitable probably has hidden costs that you aren’t aware of (transaction, taxes, exchange, etc.).

Something that still looks profitable after this probably has hidden risks (retroactive tax policy change, platform volatility, fraud, liquidity loss, price shocks, etc.) that you aren’t aware of. The trade may even appear to work, but only because you haven’t participated long or frequently enough to hit one of these events that would create a massively disproportionate loss.
 
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